Trump’s Jobs Bet Unravels on Worst Slump Since Depression
Donald Trump says he resuscitated Barack Obama’s gasping economy and proceeded to build it to its strongest in generations.
(Bloomberg) -- President Donald Trump says he resuscitated Barack Obama’s gasping economy and proceeded to build it to its strongest in generations. Now as record job losses mount across the country, the decline will bear his name in history as well.
And those losses come just six months before the election.
Presidents of both parties take credit for the economy when it’s roaring and are usually blamed when it fails, regardless of the circumstances of the downturn. An unemployment rate for April of 14.7%, the highest since the 1930s, is difficult for any politician to keep at arm’s length.
The collapse robs Trump of his chief argument for re-election and will fuel his drive to quickly “reopen” the U.S economy, even as solid majorities of Americans are reluctant to return to public life.
“We’ve got to get our economy open for the good of the people. But I do think if we get a recovery going in September and October, and people feel like things are going in the right direction, that the American people will” return Trump to the White House, said Stephen Moore, an economist who backs Trump and who participated in an April call among the president and industry leaders on reviving the country.
“If we don’t get the economy reopened, we go into November with a severe recession, then you’re looking probably at a President Joe Biden,” Moore said.
Friday’s job report numbers reinforce Thursday’s report of new unemployment insurance claims, which showed that more than 33.5 million people lost their jobs in the seven weeks since the Covid-19 crisis halted huge swaths of the economy.
Trump says Americans believe the job losses were “artificially induced” by the lockdowns enacted in most states to slow the spread of the coronavirus.
“It’s totally expected, there’s no surprise,” he said on “Fox & Friends” as the report was being released. “Even the Democrats aren’t blaming me for that. What I can do is I can bring it back.”
Trump said earlier this week that the economy will begin to recover in the third quarter, just in time for the Nov. 3 election. He echoed that thought on Friday.
“We artificially closed it. Those jobs will all be back, and they’ll be back very soon and next year we’re going to have a phenomenal year,” he said.
On Friday, he introduced a new campaign slogan to Republican lawmakers at the White House: “Transition to Greatness.”
Federal Reserve Chairman Jerome Powell gave a more sobering outlook last week, suggesting that even if a recovery begins in the third quarter, the economic battle against the virus would be far from over. Surveys have also shown that many small businesses closed during the pandemic may not reopen.
“2020 as a whole is going to be a negative year,” Federal Reserve Bank of San Francisco President Mary Daly said Thursday in an interview on Bloomberg Television. “No one who I talk to is looking for a V-shaped recovery.”
U.S. Insight: Worst is Yet to Come as GDP Downturn Intensifies
Friday’s employment numbers were so weak that long-accepted models of how they’ll impact the election may be of little use. One decades-old formula, from Yale economist Ray Fair, estimates that each percentage-point increase in the unemployment rate costs the incumbent 2.3 points in vote share come Election Day.
But Trump isn’t an ordinary incumbent, and his support has been largely impervious to the bad news so far. His current approval rating is 44.6%, according to the RealClearPolitics average of recent polls -- two points higher than the average for his presidency.
‘Diminishing Impact’
“My sense is there’s a diminishing impact of ever-higher unemployment,” said Gregory Martin of Stanford University, who’s studied the relationship between unemployment and election results. “These numbers are so different and outside the realm of what we’ve experienced before that any projections from the past are likely to be wrong.”
The election could turn on Trump’s ability to make it a devil-you-know choice between him and Biden as an economic steward, arguing that “I’ll do it again.”
“If somebody comes along and raises taxes and does all of the nonsense that they’re talking about, you’ll have a crash like you’ve never seen before,” Trump said earlier this week.
An NPR/PBS NewsHour/Marist Poll last week showed voters trust Biden more than Trump to manage the economy, by 55% to 41%. But Trump’s base remains faithful, with 91% of Republicans and 64% of non-college-educated white men saying they’d rather have him at the helm.
Georgia and Texas
Those without a college education were hardest hit by the Covid-related downturn, though, with an April unemployment rate of 16.3%, almost double that of 8.2% for those with four-year degrees.
The numbers of Americans suddenly without jobs is hitting states Trump needs to win. Georgia and Texas, two Republican-controlled states where Democrats saw big gains in 2018 elections, had some of the highest numbers of new unemployment claims for the week ended May 2. Their governors are also pushing for businesses to reopen.
Biden, the presumptive Democratic nominee, is campaigning on his work as vice president managing the stimulus money the Obama administration doled out after the 2008-2009 recession. He’s made Trump’s stewardship of the economy just one factor in what he argues is a broad mismanagement of both the public health and economic crises associated with the coronavirus pandemic.
Biden called the data released Friday “the worst jobs report in history” and said Trump squandered a good economy he inherited from Obama through tax cuts to the wealthy and an obsession with the stock market.
“It’s an economic disaster worse than any we’ve seen in decades, and it’s all made worse because it didn’t have to be this way,” Biden said in a live-streamed speech. “Donald Trump failed to prepare us for this pandemic.”
‘Jobs, Jobs, Jobs!’
When 2020 began, the U.S. economy was in the midst of a record-long expansion. The overall jobless rate had dropped to a half-century low and Trump regularly championed the job gains under his tenure.
“JOBS, JOBS, JOBS!!!” Trump tweeted as recently as March 6, after the February unemployment report showed the jobless rate dropping to 3.5%.
Millions of black Americans found new jobs in recent years, pushing the unemployment rate for that category down to an all-time low in August 2019. Women also entered the labor market at an increasingly high pace, and as of December they made up the majority of payroll employment.
Then in March, the pandemic struck and businesses shuttered across the country. The U.S. economy shrank at a 4.8% annualized pace in the first quarter, the biggest slide since 2008 and the first contraction since 2014. The current quarter is likely to be far worse, with analysts expecting the economy to tumble by a record amount. Bloomberg Economics has projected a 37% annualized contraction. Growth could return by the third quarter.
Pre-Virus Record
But the Trump campaign insists that his pre-virus record on jobs is also the key to his re-election.
“There is no denying that President Trump’s policies had the economy reaching unprecedented heights before it was artificially interrupted by the coronavirus,” the campaign said in a statement. “Now that the economy has been hit by such an outside force, the president’s record of job creation is even more salient.”
The Trump campaign said Friday that Biden “presided over the slowest economic recovery since World War II and has promised to raise taxes and burden job creators with strangling regulations under the Green New Deal. He does nothing but sit in his basement and lob political hand grenades, serving up partisan pablum and mumbling incoherent criticisms designed to score points, not help.”
Democratic National Committee Chairman Tom Perez, however, said the jobs report was the result of “a historic failure of leadership” by Trump and congressional Republicans.
“The only thing more staggering than this jobs report is the incompetence that caused it,” Perez said in a statement Friday. “The American people are hungry for new leadership. They know the blame lies at Donald Trump’s feet, and they are going to make him pay the price in November.”
Some voters are likely to give Trump the benefit of the doubt since the recession was caused by the coronavirus and not by an economic policy, said Glen Bolger, a Republican strategist. And some will remain supportive of the president for cultural reasons and not for the economy, he said.
“It won’t just be the economy,” Bolger said. “The economy will be the big dog, but there will be other factors as well, some of which as we know are cultural, that there are big cultural differences between the Republican and the Democratic party.”
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